BYD Co. led Chinese electric vehicle stocks lower in Hong Kong on Monday, as investors digested the auto giant’s sweeping price cuts of as much as 34% late last week.
To kickstart sluggish consumer demand — made worse by China’s broader economic malaise — automakers in the world’s biggest car market have slashed sticker prices. Even so, stock levels at dealerships last month reached 3.5 million cars, or 57 inventory days, the highest since December 2023, according to data shared last week by the China Passenger Car Association.
Revisions by BYD include paring the price of its Seagull hatchback to 55,800 yuan ($7,780), a 20% reduction to a model that was already the carmaker’s cheapest and one that had garnered global attention for its sub-$10,000 price tag. The Seal dual-motor hybrid sedan saw the biggest price cut at 34%, or by 53,000 yuan to 102,800 yuan.
“While some of these discounts have been in place since April, the official announcement sends a strong signal of how tough the end market is,” Morgan Stanley analysts including Tim Hsiao wrote in a note.
BYD’s latest cuts are expected to have a knock-on effect, as rival automakers further trim their prices, slicing deeper into already thin margins. The intense pricing pressure is straining many carmakers’ bottom lines, leading to mounting financial losses and industry consolidation.
“We anticipate peers to follow BYD’s price cut,” analysts at Citi Research wrote, noting that Chongqing Changan Automobile Co. announced a cash discount of 25,000 yuan for its Deepal S07 model over the weekend while Zhejiang Leapmotor Technologies Ltd. adjusted prices for its C16 full-size crossover sport utility vehicle and mid-sized SUV C11.
Citi estimated that after the weekend’s discounts, BYD dealership traffic may have surged between 30% to 40% week-on-week.
Thanks to BYD’s vertically integrated supply chain — it makes its own batteries and many of its own semiconductors — and domestic scale, which helps reduce production costs, the impact of China’s car price wars on its balance sheet is more muted than for some other automakers.
